Lifestyle Trending

529 College Fund Savings Accounts Advantages and Benefits

Have you started your 529 College Savings Accounts yet? Saving a little at a time is the key to a great College Education in the Future. With College Cost rising by 225% over the last 30 years, it is highly unlikely this trend will stop. Sign up for 529 College Savings Accounts for your children and grandchildren as soon as possible and reap the many advantages and benefits down the road.

Are 529 College Savings Accounts The Right Choice?

You can choose from plenty of Funds, however, keep this in mind:

“Buyer Beware! College Funds are NOT all Equal”

College Funds are a great way to invest into your children’s future. It is very well documented that a College Education increases Income Potential dramatically. Do your due diligence and compare plans. Some 529 funds are loaded with management fees and Commissions. Many “direct-sold” 529 College Savings Accounts don’t have commissions and are available for lower fees.

You don’t need to stay within your State when looking for 529 plans. States don’t care where the money comes from. However, investing in a Fund within your state could have significant tax benefits.

529 College Funds are one investment anyone can make. The Account grows tax free, and withdrawals are tax free as long as the money is used for college related expenses. You can start with little and see it grow to a lot.

529 College Savings Accounts Advantages & Benefits

“A 529 plan is designed to encourage early and consistent savings efforts by offering an easy, affordable and convenient way for families to save for college. While the tax advantages are one of the primary benefits, states also offer a variety of features and benefits to help families reach their college savings goals.

  • All money grows free from federal and state income-tax.
  • All withdrawals are exempt from federal income tax when used for qualified higher education expenses.
  • Many states also exempt withdrawals from state income-tax for qualified higher education expenses.
  • The account holder retains control of the assets within the program regardless of beneficiary’s age.
  • Most plans have very low minimum monthly contribution limits making them attractive to families regardless of income level. Some states have minimum limits as low as $15.
  • The beneficiary can be changed at any time to another member of the beneficiary’s family (out to first cousins).
  • The Money can be used for virtually any accredited college in the country. You can find qualified schools on FAFSA’s website.
  • The Money can pay for a variety of college expenses, including tuition, fees, room, board, books, supplies and required equipment.
  • Contributions can be made conveniently through payroll deduction or automatic transfers from a bank account
  • Many states offer maximum contribution limits of $300,000 or more.
  • Assets within 529 plans are protected from bankruptcy.
  • Most states offers a  low cost option that can be opened by contacting the plan directly.
  • Many 529 plans are also offered through professional financial advisors who can help you choose a 529 plan and an investment strategy to meet your needs.
  • Account owners can make a lump sum contribution of up to $70,000 per beneficiary or $140,000 if married filing jointly and avoid incurring a Gift Tax on this amount by electing to use five years of the annual gift tax exclusion all in one year. After utilizing this provision, the annual exclusion cannot be used again for the same beneficiary until the five year period has passed. Should a donor die within those five years, a pro-rata amount of the gift will revert back to their estate and be treated as a taxable gift.” – via CollegeSavings.org  

Another Benefit of 529 Savings Plans is Gifting. Most 529 plans offer a convenient way for friends and family to contribute to established College Savings accounts.

529 plans by state 

529 college savings plan calculator

Get started early in your children’s life. College Expenses are not getting cheaper. Choose from the best performing 529 plans via 529 plan rankings. Choosing the best 529 college savings plan as soon as you can ensures your child’s education in the future.